Hey Ghoul, see what I did there 😂! I saw your Google Search…😳 And it almost scared the sheet off of me! 👻
You’ve been wondering how much you could make on your home, how much home you could afford, and will housing prices and interest rates ever go down again!?
You’re not alone!
But it scared me that you’re relying on Google when you should be talking to a local real estate agent who can give you the most up to date, accurate information (someone working in and experiencing the real estate market every single day)!
LIKE ME! 👋
Everywhere I go, people are asking me that same thing. So, I’m laying it all out there for you.
In this post, I will address one of these questions and give you my best advice so you can make decisions with confidence. 🤝 By the way, never hesitate to reach out and ask me your questions instead of referring to Google!
I know it’s Halloween time but, sorry! I don’t have a crystal ball to help me tell the future! 🔮
I may not be able to look ahead but I can look back at history and use that to help me predict what will likely happen with these rising interest rates.
Side note: Sometimes navigating these articles about interests rates can give me flashbacks of my college econ class, but I’m gonna try to explain this as simply as possible.
Inflation is high (I mean, have you been to the grocery store!?) And when inflation is high, interest rates are also high.
The Federal Reserve has a goal to bring inflation back down. They want it to be around just a 2% increase each year instead of the upwards of 8.9% we’ve been seeing the last several months.
Historically the direction of inflation leads the way and interest rates have followed suit. So when inflation is high, interest rates are high. But when inflation goes down, interest rates have always gone down, too.
If the Feds can bring inflation back down to 2%, it could lead to lower interest rates, making it much more affordable for you to buy a home.
This is SUCH GOOD NEWS, right? Mostly! It’s nice to know we are headed in the right direction and there’s a good chance of lower interest rates again (although let’s not forget that a 7% interest rate is not bad considering 20% interest rates have been a thing before).
However, with lower rates comes…more buyers! Which means more housing competition.
This doesn’t scare me as I help buyers compete over other offers all the time, but this is why I’ll tell you the same thing I tell my clients: if you CAN afford your payment at a higher rate, now is the time to buy.
Get locked in to a house you love and simply refinance when rates drop again so you don’t have to compete with as many offers as you will if you wait.
Whew, that was a lot, wasn’t it? The good thing is, you don’t have to totally understand all of that. You just need an agent (or two) in your corner who does…
…and Google says the best time to sell a house is…HA! Just kidding.
It’s time to stop relying on random internet searches to make decisions about your future. Let’s look at the FACTS together.
So, what is your home worth? To find out, I’ll look at recent sales in your area and compare those homes to yours. Do you have similar square footage, lot size, updates, and features like a fireplace or stamped concrete patio?
Other things I consider is how long the homes were on the market, if they sold for over asking price, was the home sold as is or were there other terms and conditions that factored in the price, etc.
Then let’s look at what you owe on your home. You’ll either find this number on your monthly statement or you can pull it up online.
We will deduct that number from what we think your home is worth (we can come up with 2 or three different numbers based off of how conservative or aggressive we want to be).
But remember, this isn’t your final number. If you decide to sell your home, you’ll have costs you need to consider.
You will have realtor fees as well as fees from the attorney and any other dues/fees, plus the cost of any staging or updates you may need to make before you list your home…but this will give you a good idea to see what you could net on your home.
The best way to know for sure what’s possible is to schedule a meeting with your agent (if you’re reading this, there’s a good chance that’s me!) so they can go over your specific home selling plan. This is the only way to make this decision with confidence and I am here to help!
Picture this: you’re sitting at lunch with two of your friends and you are eager to tell them that you’ve been saving up for a house, but before you get a word in, they start talking about home prices and interest rates and inflation and just “how terrible” everything is right now. And now, instead of excitedly telling them all about your plans, you sit there, stirring the ice in your Diet Coke with your straw feeling defeated.
It’s not nearly as doom and gloom as your friends (and everybody else in the world) are making it. BUT there are some things you need to seriously consider…like how all of this effects your bottom line.
How much house can you afford anyway?
To get to the bottom of this, you first need to talk to your local lender. (Don’t have one? No big deal, I have some great recommendations!)
Talking to a lender is not necessarily a formal sit down meeting, by the way. Most of the time there’s a simple form to fill out online and they give you a quick call when they’re done running your numbers to let you know where you’re at and what a good action plan would be for you! SO SIMPLE.
A good lender will answer most of your questions but it’s also so important to know YOUR numbers. A lender looks at your debt and income and gives you your max number of what they’re comfortable loaning you. But that doesn’t mean you’re comfortable spending that much each month!
Lenders are so helpful, but YOU have to know what you’re comfortable putting towards your home. So get to know your numbers and let your lender know them too, and that will help you determine not only how much you CAN afford, but how much you’re willing to spend!
Bottom line: there’s no one answer to how much you’re allowed to spend on a house…you just have to know your lender’s limitations and what you are comfortable with!
We can’t wait to hear about your home journey vision! We would love to be a part of your family’s story and support you with a #tayloredexperience.